What Role Does Racial Integration Play in
Economic Performance of the (United) States?
An Empirical Investigation Using Panel Data Analysis Said Boakye
October 2007, updated April 2008

ABSTRACT

It has been found empirically that social fractionalization limits economic
growth and development. What has not been studied is the extent to which
social integrative processes may ease these limitations and thus positively
contribute to economic growth and development. Using a panel of the 48
contiguous U.S. states as a case study, this paper examines the role racial
integration as measured by the percentage of interracial marriages plays in
the determination of income per capita. I find that racial integration as
measured by the percentage of interracial marriages is a significant predictor
of income per capita across these states. To account for the problem of
reverse causality and thus endogeneity, the number of decades the states have
allowed interracial marriages by repealing antimiscegenation laws is used as
instrument for interracial marriages for instrumental variable estimation.
I also use the 1967 U.S. Supreme Courts decision, which overturned the
antimiscegenation laws of the states that continued to have such laws as an
exogenous event for dfference-in-difference estimation.